Alaska Airlines used to be the easiest upgrade in the United States, thinking back seven or so years ago. Back then upgrades came out of revenue inventory and cost only 5000 frequent flyer miles each way, confirmed at booking.
Then they introduced U (capacity controlled upgrade) inventory, if memory serves around 2002. MVP Gold (top tier elite) members could confirm upgrades at the time of booking from any fare, provided U space was available. MVP’s (first tier elite) could do so on full fare tickets. The plus was that no miles were required. Of course any capacity controls are a bigger takeaway than whatever is offered in exchange. And this was the beginning of a gradual devaluation in upgrade benefits.
Admittedly, Alaska had little choice — they began flying cross-country and doing so with 737s with only 12 first class seats. It became easier to earn miles and status, and there simply weren’t enough first class seats to go around given the elites and the large stashes of miles that more and more folks were accumulating.
Alaska increased the number of miles required for an upgrade from 5,000 to 10,000 and those began coming out of U inventory as well.
In 2004 Alaska began requiring that MVP Golds wishing to upgrade at booking into first class do so by purchasing Q (mid-level coach) fares or higher. One could still confirm upgrades with any fare using miles. MVP Golds could also still upgrade at their window three days in advance of travel if any first class seats remained available. In 2006 Alaska bumped up the fare that had to be purchased in order to confirm upgrades.
Flash forward and now mileage upgrades cost 15,000 miles and can only be done on higher coach fares. MVP Golds can still upgrade at booking on the highest coach fares. But both types of upgrades come out of U inventory, and therein lies the biggest change. Where once first class upgrades came out of revenue inventory, and where later they came out of capacity controlled inventory but that inventory was more or less available in advance at least if you had some flexibility, now U upgrade inventory is rarely seen in advance except for on the shortest flights.
Sure, it makes sense. Alaska is hoping to sell those seats after all. A few years ago they considered getting rid of first class altogether, since they weren’t seeing a revenue premium associated with those seats (although clearing upgrades drove loyalty for their Mileage Plan members).
Now it’s very rare to find advance confirmable upgrades, even when spending miles or for MVP Golds buying a higher fare at booking. And I frequently see transcon flights sold out in first class weeks in advance.
How can that be? Is Alaska actually selling those seats? The answer is yes, sort of.
Two things appear to be going on.
First, they’ve made discounted first class seats regularly available, so the premium for actually buying first class isn’t that great. In my experience it’s roughly double the price of advanced purchase (but not the deepest sale fare) coach on many routes. A $500 transcon in coach might cost $1000 in first.
Second, an increasing number of customers are using companion tickets on paid first class fares. The Bank of America co-branded Visa comes with a $50 companion ticket that is good on any fare, and which books the companion into the same fare class as the paid ticket. Moreover, the companion ticket’s availability isn’t capacity controlled in any way. (The Bank of America small business credit card offers a $99 companion ticket but functions in much the same way.)
Whereas an MVP Gold might have in the past used such a companion ticket on a Q fare and confirmed upgrades at booking for both passengers out of U inventory, now the most valuable use of these certificates by far is the purchase of a regular first class fare. Both customers are in first class, there’s no inventory control, the seats come out of the revenue first class fare bucket as long as first class is for sale on the flight. And roughly speaking the two passengers are in first class for the price of two coach tickets. Sure, it’s more expensive than buying a coach ticket and getting a $50 (or $99) companion ticket. But not that much. If the premium is, say, $400 then both passengers are in first class for an incremental $100 apiece each way. On Newark-Seattle, Boston-Seattle, or DC-Seattle (or for that matter, any of those cities to Anchorage or to Hawaii) this strikes me as clearly worthwhile — especially when upgrades have become so much more hit or miss, even for top-tier elites.
Perhaps Alaska is seeing a sufficient revenue premium from the purchase of first class seats using these certificates, at least compared to the past when first class might fill up on confirmed upgrades often using these same certificates. But there’s a reasonable likelihood that Alaska will become frustrated with selling paid first class tickets (which also come with a 50% mileage bonus and entrance to Alaska Airlines lounges on day of travel but not partner lounges) for the price of coach, even as they’re tightening upgrade space. In which case my worry is that these certificates will become less useful — usable on coach only, or capacity controlled in some way.
Perhaps not. Even if Alaska might contemplate such a move, hopefully Bank of America would push back. After all, these certificates are one of the most valuable features of the credit card, and Bank of America has some clout with Alaska to the extent that they’re purchasing over $200 million a year in miles from the airline which is a huge deal for a carrier of this size (where swings of $10 million or so in either direction mean the difference between profit and loss for the year).
In the meantime, one of the great values in airline travel is, in my view, the Bank of America companion ticket used to purchase Alaska Airlines first class travel for two.